Foreign media reports that sources familiar with the matter have revealed that Tesla plans to establish a data center in China to utilize data generated within China for the development of its global application of the Full Self-Driving (FSD) system. Additionally, Shanghai has relaxed some of the data export restrictions for Tesla.
According to a report by Reuters on May 17th, unnamed sources disclosed that Tesla has been making efforts until recently to obtain approval from Chinese regulatory authorities to transmit data generated by Tesla vehicles on Chinese roads to overseas data centers for training the algorithms necessary for Full Self-Driving.
The sources also mentioned that Tesla is currently considering building a data center in China to handle the collected data.
It is not yet clear whether Tesla will proceed with both the “data transmission overseas” and the establishment of a “China data center” options to manage the autonomous driving data coming from within China, or if they will opt for alternative contingency plans.
The report highlights Tesla’s strategic shift towards investing in artificial intelligence (AI) as demand for electric vehicles slows down and competition intensifies. China is Tesla’s second-largest market globally, and the implementation of Full Self-Driving in China is expected to boost Tesla’s revenue and profits.
Sources indicate that in order to establish a data center in China for developing Full Self-Driving, Tesla must collaborate with a Chinese joint venture.
Furthermore, there are challenges in hardware procurement. One insider revealed that Tesla has consulted with Nvidia to acquire its graphics processing units (GPUs) for the China data center. However, the U.S. has restricted Nvidia and its affiliated companies from selling their most advanced chips to China (Communist China).
Nvidia declined to comment on the matter.
In late April, Musk made a whirlwind visit to Beijing, where he met with officials including Chinese Premier Li Keqiang.
Two sources mentioned that during the meeting with Li, Musk expressed hopes that once the Full Self-Driving system is implemented in China, the Chinese government would approve the transmission of its data overseas. The possibility of Tesla investing in and establishing a data center in China was also discussed during the meeting.
An insider stated that Musk also discussed the possibility of licensing Tesla’s Full Self-Driving system for use by Chinese electric vehicle manufacturers. Tesla is currently in discussions with a “major” automaker regarding the licensing of Full Self-Driving, although the name of the automaker was not revealed. The Chinese State Council Information Office did not respond to media requests for comments.
Musk had previously been opposed to establishing a data center in China, believing that transmitting data to the U.S. was the most effective choice.
Since 2021, Tesla has stored the data collected from electric vehicles in China in Shanghai. Two insiders mentioned that the Tesla China team has been seeking approval from Chinese regulatory authorities to transfer the data overseas.
On May 17th, Reuters reported (click here) that a government document they saw indicated that Shanghai had compiled a list of data that can be transmitted overseas without the need for security assessments, as part of efforts to attract foreign investment to boost the struggling economy.
The document revealed that in a year-long pilot project, companies registered in the Shanghai Free Trade Zone where the Tesla Shanghai factory is located can transfer data listed on the list overseas without further security assessments.
The report stated that as a major hub for markets and businesses in China, the Shanghai government has compiled the first batch of “normal data” involving three areas, namely smart connected vehicles, mutual funds, and biopharmaceuticals. The government document stated that minimal regulatory requirements are needed for the transmission of this data.
In terms of the automotive industry, data includes production information such as procurement and inventory, research and development information such as vehicle design and testing, as well as post-sales service and information on the sale of used cars.
Reuters found that on the afternoon of the 17th, the rules for data transmission in the Free Trade Zone were immediately put into effect.
Tesla’s expansion in China from vehicle production to the field of autonomous driving has faced criticism from experts warning of the typical “nurture, copy, kill” approach of the Chinese Communist Party towards foreign enterprises.
Economist Wu Jialong, in an earlier interview with The Epoch Times, pointed out that Tesla was stepping into the four-act play of nurture, copy, kill by the CCP.
In the first step, the CCP offers many policy incentives including attracting talents to lure foreign investment to set up plants in China for key industries they want to develop. Tesla’s initial decision to establish a plant in Shanghai was based on the belief in the huge electric vehicle market opportunities in China, which turned out not to be the case.
In the second phase, CCP companies will begin to imitate and replicate all operations and management models, with the most crucial goal being technology theft, even going as far as establishing similar factories in locations near foreign invested plants.
In the third step, China starts to introduce numerous “self-owned brands” gradually substituting foreign products in the Chinese market, implementing an import substitution strategy of “not buying foreign goods, only buying domestic goods,” leading to Tesla’s recent losses, becoming a sacrificial lamb under the CCP’s external fund-sucking methods.
In the fourth stage, Chinese companies begin to export excess capacity abroad, further impacting overseas markets.